Mr. Safra has since pumped an estimated $500 million into the venerated but money-losing encyclopedia and its Britannica.com foray into the digital age.

Now, Mr. Safra is moving to salvage his investment. The publicity-shunning, fiftysomething investor has scrapped much of Britannica.com's splashy strategy as an Internet portal for the bookish set and this spring hired CEO Ilan Yeshua, a 20-year veteran of Israel's largest educational technology firm, which sold several divisions to Encyclopaedia Britannica earlier this year.

Mr. Yeshua's marching orders: Return Britannica to its educational publishing and research roots, and show a profit  its first in a decade, sources say  by early 2002.

"It's really do or die for them," says Jocelyn Turpin, a former executive producer at Britannica.com.

Shifting focus

That's a painful adjustment for a company that worked hard and spent heavily to build a large Internet audience. Blinded by the prospect of reaping instant IPO riches, Britannica.com committed typical dot.com excesses: overestimating revenue prospects, blowing an estimated $22 million on Super Bowl 2000 advertising and giving away the goods  the entire Encyclopaedia Britannica  for free, online.

"Like many others in this industry, we're recovering from the delusions of the Internet model," says the 45-year-old Mr. Yeshua. "We are going back to our bread-and-butter market, to the most loyal market in the past and the future  I can't say the present."

That entails shifting focus from consumers to schools, reference libraries and universities. As a first step, Mr. Yeshua is overhauling the print set, the company's core business since 1768. This November, Britannica will release its first updated edition since 1998. And the firm plans to further beef up its publishing effort with a series of one- and two-volume reference books.

He hasn't entirely abandoned the Internet. Indeed, last week, the company launched BritannicaSchool.com, a fee-based online service providing teaching and educational materials for teachers and students in kindergarten through 12th grade.

Mr. Yeshua also is negotiating partnerships to create more print and disk-based products to be marketed under the Britannica brand. And he's in talks with potential sales partners to broaden the company's distribution network, neglected since it jettisoned its door-to-door salesforce in 1996 after Mr. Safra purchased the firm from the William Benton Foundation.

It's all part of an effort to create new revenue streams for what's currently a one-product company. Revenues at Encyclopaedia Britannica last year plummeted to less than one-third of the $387 million the firm generated in 1995, a source says. (A company spokesman declined to discuss revenues or spending.)

Mr. Yeshua also plans to begin charging subscription fees for Britannica.com at the end of this month. The site will offer some free services, but consumers will have to pay in order to search its full, 44-million-word database or to tap into the updated encyclopedia, once it's available.

But the fees could alienate a considerable portion of Britannica.com's 1.6 million monthly users, further eroding the consumer site's advertising base and online product sales. "Web users are still under the assumption that things are free or should be free," notes Lisa Strand, chief analyst for e-commerce strategies for California's Nielsen/NetRatings Inc.

What's more, Encyclopaedia Britannica's new, old market is ferociously competitive. The high volume of free information available over the Internet continues to threaten encyclopedia companies, which have consolidated from about eight major players to three: Britannica; Chicago's World Book Inc., owned by Warren Buffett's Berkshire Hathaway Inc., and Microsoft Corp's Encarta.

Mr. Yeshua's task is to preserve Britannica's share of the shrinking encyclopedia market, while profitably adapting the firm's 233-year-old brand and content to the information age."I think EB has a terrific franchise," says Chicago venture capitalist Matthew McCall. "Their challenge will be in defining their online business somewhere in between the broad content sites such as Dow Jones, Lexis-Nexis and Google and the deep, focused niche players."

Last year's market crash scotched plans to spin off Britannica.com as a separate, public company and decimated the Web site's advertising revenues. With heavy input from Mr. Safra, the online enterprise was originally envisioned as the National Public Radio of Web portals, a place where consumers worldwide would visit daily for news and intelligent, offbeat features.

At its peak, the company burned $12 million to $15 million per month on Internet operations, sources say. Mr. Safra and the firm's management tolerated those losses since investment bankers estimated their IPO would reap billions of dollars.

But Mr. Safra shelved the stock offering plans after the Nasdaq crashed last year. Executives moved quickly to trim costs and develop a new business model, jettisoning efforts to create new Web businesses in Australia and the United Kingdom.

As the Internet market worsened during the fall and winter, the firm stopped creating original content for the Web, including a highly touted feature interpreting the arcane references of football commentator and comedian Dennis Miller. The firm laid off 152 people, mostly online editors and writers, about half of its North American employees.

'Plug was pulled'

Ironically, these moves came as Britannica.com garnered its largest audiences, more than 2.6 million users in October alone. "It's unfortunate, but just as the site was really clicking and getting attention in the press, the plug was pulled," says Rodger Brown, the former managing editor of Britannica.com.

As it became clear that the educational market offered the greatest potential, Mr. Safra purchased Israel's Center for Educational Technology Holdings Inc. for its library of more than 200 CD-ROM titles  and its executive team.

Mr. Yeshua says he spent his first 90 days as CEO slashing operating costs and merging Britannica.com back into the encyclopedia division. "We now have one core operating group and one core technology group," he adds.

Are these steps signs that Mr. Safra's enthusiasm for the firm is finally waning? "Ironically, the steps for riding this out and selling are exactly the same: chop it down, make it profitable," says Ms. Turpin, a former Britannica executive. "I think Jaqui in the end is a businessman. He will make a decision based from that."